Amazon tariff fallout: Shares dip after White House accusation ahead of Q1 earnings

Amazon shares took a dip on Tuesday (April 29) after a fierce accusation from the White House. What sparked the controversy? A rumored plan by the e-commerce giant to display tariff costs on certain products, something the Donald Trump administration branded a “hostile and political act.”

White House Press Secretary Karoline Leavitt did not mince words. Speaking to reporters, she asked, “Why didn’t Amazon do this when the Biden administration hiked inflation to the highest in 40 years?” She went on to accuse the company of cozying up to foreign interests.

So what actually happened? Let us unpack the issue and Amazon's response to it.

Amazon’s response to 'tariff cost' tussle

According to Amazon, the controversy was based on a misinterpretation of internal discussions. The company clarified that it had explored—but never approved—a feature that would show import charges on items sold through Haul, its ultra-budget storefront offering products mostly priced under $20. Launched last year, Haul is Amazon’s response to Chinese retailers like Temu and Shein. 

Despite the Punchbowl News report suggesting otherwise, Amazon stated flatly that there were no plans to list tariff surcharges, on Haul or the main Amazon site. “This was never approved and is not going to happen,” said Amazon spokesperson Tim Doyle. Amazon’s swift clarification helped put out much of the fire, and Commerce Secretary Howard Lutnick even acknowledged the move as a “good decision” in a follow-up post on X.

The Amazon tariff trigger

This is not just a political spat, there are real numbers and consequences behind it. Earlier this month, President Trump introduced sweeping tariff hikes: a 145% tariff on Chinese goods, and a 10% flat rate on imports from all other countries. 

For an e-commerce giant like Amazon, which relies heavily on third-party sellers sourcing goods from overseas (particularly China), the impact is immediate. Prices on key categories like home appliances, electronics, and fashion have already climbed. 

According to research platform SmartScout, the average price jump across affected items is around 30%. Amazon sellers are now adjusting: raising prices, cutting advertising spend, and rethinking logistics. Meanwhile, rivals like Temu have begun adding steep import fees to their own listings, with some charges exceeding 150%.

Drama before Amazon earnings report Q1

This political drama has landed just days before Amazon’s first quarter earnings report scheduled to be announced on Thursday. The earnings report will give investors their first real look at how the company is handling the new tariff reality.

What analysts expect from Amazon

Source: Bloomberg Estimates, Amazon earnings report

While those numbers reflect healthy growth, concerns remain. UBS analyst Stephen Ju estimates that over 50% of products on Amazon’s platform may be subject to higher import duties. That means consumers could face harder choices, and sellers might struggle to maintain margins. 

Ju also warned of broader ripple effects: exporters to the U.S. might suffer revenue declines, potentially leading to layoffs or reduced international trade, a domino effect that could stunt Amazon’s global growth ambitions.

In the previous quarter, Amazon brought in $187.79 billion in total net sales. Here's a breakdown of the earnings

Source: Company report

Amazon’s traditional online business continues to be the anchor, but AWS and advertising are becoming increasingly important in terms of profit margins. As costs rise from tariffs, these higher-margin areas may be crucial in offsetting potential losses from retail. 

Analysts are watching Amazon closely, not just for how it responds to tariffs, but whether its big bets, especially on AI, are delivering. Like Alphabet and Microsoft, Amazon is investing billions into AI data centers and enterprise tools. But so far, the results have not moved the needle dramatically. 

Investors want to see tangible returns, especially as geopolitical pressures add uncertainty to Amazon’s core business. 

Bezos and Trump: From rivals to allies?

The latest episode has added another twist to US President Donald Trump and Amazon founder Bezos' complicated relationship. The tension between the two in the past is no secret. In Trump’s first term, Bezos was often the subject of public criticism, largely due to his ownership of The Washington Post.

But recently, the dynamic appears to have softened as Bezos attended Trump’s inauguration, dined at Mar-a-Lago, and even had Amazon donate to the Trump inaugural fund.  More surprisingly, Amazon reportedly spent $40 million to license a documentary on Melania Trump. 

In April, after the tariff news blew up, Trump personally called Bezos. According to sources, the call was surprisingly cordial. “He was very nice, he was terrific… he solved the problem very quickly,” Trump told reporters. “He’s a good guy.”

Amazon has faced headwinds before. The question now is whether its agility, ecosystem, and tech investments can keep it ahead, politically and financially.

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